SEC v. Christopher A.T. Pedras, et al., Case No. CV 13-07932 DMG JCGx (C.D. Cal.) On November 4, 2013, the SEC announced it obtained an emergency asset freeze against Christopher A.T. Pedras who allegedly deceived investors into believing they were investing in a profitable trading platform. In reality, he was using new investor money to pay returns to earlier investors. Pedras was assisted by his business partner Sylvester M. Gray II and his sales representative Alicia Bryan. According to the SEC, Pedras raised more than $5.6 million. Pedras, Gray, and Bryan initially solicited investors for the “Maxum Gold Small Cap Trade Program” which involved Pedras’s company Maxum Gold. Maxum Gold claimed to serve as the go-between for banks that can’t legally trade with each other directly allowing the banks to use the so-called trading platform to trade indirectly. The SEC alleges that Maxum Gold claimed to share portions of the trading profits with investors. The SEC also alleges that Pedras promoted the “FMP Renal Program” to investors. According to the SEC, the program was described as an investment in a New Zealand company called FMP Medical Services Limited that would be publicly traded and operate kidney dialysis clinics in New Zealand. Pedras told investors that if they converted their Maxum Gold investments into the FMP Renal Program, they would instantly realize an 80 percent increase in the value of their investment.

The SEC alleges that Pedras and Bryan lied to investors by claiming that Maxum Gold had been doing business for 15 to 20 years with thousands of clients. They also claimed to make regular payments to investors. In fact, millions of dollars in returns actually came from new investor money. According to the SEC, Pedras also stole more than $2 million from investors. Lastly, the SEC alleges that Pedras told investors not to respond if contacted by the SEC. He told investors that the SEC’s investor questionnaires were fake and the SEC had a “personal vendetta” against him.

The SEC’s charged Pedras, Gray, Bryan and the Maxum Gold and FMP entities with violations of Section 17(a) of the Securities Act, Section 10(b) of the Exchange Act and Rule 10b-5. Pedras and Bryan also are charged with violations of Section 15(a) of the Exchange Act, and they and Pedras’s companies are charged with violations of Sections 5(a) and 5(c) of the Securities Act. In addition to the emergency relief obtained, the SEC seeks preliminary and permanent injunctions, civil monetary penalties and disgorgement.